India bond yields inch up, tracking US yields
By Bhakti Tambe
MUMBAI, Oct 11 (Reuters) -Indian government bond yields ended marginally higher on Friday tracking a further rise in U.S. peers, but declined for the week on the back of upbeat sentiment.
The benchmark 10-year yield IN071034G=CC ended at 6.7914%, compared with its previous close of 6.7775%. It ended nearly four basis points lower this week, after rising 7 bps last week.
The yield had inched up towards 6.80% earlier in the day, hurt by a selloff as the rupee hit a record low and crossed the key psychological level of 84.
U.S. yields climbed on Thursday, particularly with the 10-year and longer-dated notes, after data showed that the consumer price index increased 0.2% in September after posting the same gain in August.
"If the pace of decline in U.S. inflation towards 2% is going to be slow or bumpy, so will be the rate cut," said Anitha Rangan, economist at Equirus Group.
"Federal Reserve's 50-basis-points cut, if was front loaded, may have to pause for one policy. Unless there is a broad-based decline in inflation, the rate cut path will always have to be guarded."
The odds of the Fed cutting rates by 25 basis points in November remained around 85%, and bets of a status quo continued to hover near 15%. FEDWATCH
Still, the underlying sentiment for Indian government bonds remained supportive after FTSE Russell said it would include them in its emerging market debt index, and as the Reserve Bank of India changed its policy stance to "neutral" earlier this week.
Equirus's Rangan sees food inflation risks persisting in India and consequently, the central bank's rate cut trajectory will also be "slow and steady" with a first rate cut likely in February.
The country's retail inflation in September likely overshot the RBI's 4% target for the first time since July due to a persistent rise in vegetable prices, a Reuters poll showed. The data is due on Monday.
Reporting by Bhakti Tambe; Editing by Varun H K
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